Eric Brewer shares his Success in Real Estate through Car Sales Expertise

Kevin Harrington
Hi, I’m Kevin Harrington, an original shark from the hit television show Shark Tank and you’re listening to the underdog podcast.

Pamela Bardhi
Hello, everyone, and welcome to the underdog podcast today I have an incredible guest here with me, Eric, how are you, my friend?

Eric Brewer
I’m doing good. Thanks for having me, Pam. Appreciate it.

Pamela Bardhi
Oh my god, it’s such an honor to have you like we were just talking about this prior to you telling me about all these new techniques in real estate. And I’m like, Man, I just can’t wait to hear your story and hear all the amazingness that you’re up to in the world. And, you know, we’re in the same family, the family mastermind thanks to Matt Andrews, which is incredible. I’m honored to hear your story today and rock and roll from there. One of my favorite questions to start off with is really what inspired you on your journey to where you are today. My friend?

Eric Brewer
Oh my goodness, I would say the beginning of my story is a great example of the lack of inspiration. I was without getting terribly deep all allow you to ask the questions you want the answers to. But to give you a deep rub around my junior year in high school, my folks made a decision to part ways. That resulted in me having way more freedom than I deserved at that age. Was not a good steward of that freedom, you know, started running around school wasn’t a priority to me was more interested in where the party was then. Whether or not I got my homework done and prepared for school the next day and got into like a little bit of trouble like you know, verbal altercation or something in class one day and got suspended.

And as a role on the basketball team. If you got suspended, you were no longer able to be on the basketball team. And that kind of spiraled me into a series of even worse decisions because once sports went away. I had zero reasons to go to school, just struggled through high school, barely limped out with my high school diploma. Had no direction at the end of high school. Six months after everybody else had gone off to college or started a trade school, or was working on their career. I was just lost, didn’t know what was going on, and had a really good conversation with my dad and everybody.

On the male side of my family had been in the military since. As long as I can remember my great, great, great, great, great, great grandfather’s all served in the military. And that was what they did. So of course, my dad said, Son, you have no discipline, you have no work ethic, you have no direction, you’re perfect for the military.And, you know, at the time I was, I really had nothing like I was bouncing around from friends’ houses. Sleeping in basements and stuff because my parents had kind of tried to figure out what their new life was going to look like. I didn’t want to be a burden.
And so I joined the US Army went off to Fort Knox, Kentucky for boot camp, did my ai t advanced individual training at Fort Gordon, Georgia. Then my permanent duty station at Fort Hood, and served my time came home. And turns out I had no civilian application of the work that I had been trained to do in the military. I worked on communication devices and helicopters, by the way, which is not the best fit. For me. The patience that it takes to work on a tiny little piece of electrical communication device is the opposite of what you should have somebody like me doing.

So I came home and got a job at a car dealer because I thought it sounded neat. It was like, Oh, I get the drivers and Mercedes and Toyota dealer from everything I can tell about this job. I get to drive these cars all day. I showed up to a $ 7-an-hour job and a double-breasted suit that I wore to homecoming my senior year. I’ll never forget the guy coming out. It’s like an if you’ve ever taken your car to the dealer for service, that area is always like just busy. And there’s people buzzing all around and everybody’s like, anxious to get their car and get out of there. It’s like this busy little ball of tension. And I’m sitting there and I’ll never forget his name.

His name was Mark Smalley when he comes out and he’s like looking around. You can tell he’s got 1000 things going on. He like double takes at me. And I like stand up because I thought that was the guy. It goes Eric and I said yeah, he goes, You’re a double-breasted suit to this job interview. And I said Yes, sir. He goes, You’re hired. He brought me back and filled out the paperwork and started working at the car dealership. Then long story short, I went from that job which was called a lot Porter to at the end of my eight year career there. I was the general manager. I learned a lot about sales. I learned a lot about customer service, I learned a lot about business.

I learned about hiring, firing coaching, you know training, Toyota runs a remarkable operation and as an authorised dealer. We had access to all of their systems and processes and stuff. So that’s where my inspiration came to clean up my life. The military just kind of slapped it into me, and then I came back. And once I got into the car business, one of the ways that I sort of captured some attention is I made like seven bucks an hour. I couldn’t do anything on seven bucks an hour. I wanted to have an apartment, I wanted to do all these things. So I noticed when I would leave around four or five o’clock in the afternoon that there was these other people that were coming in. They were going over to the cleanup or detail department at the dealership.

And I just started asking questions like, yeah, those folks come in, and they wash and clean cars for the sales department till about 10 o’clock at night. And I said, Well, if there was ever a chance for me to get some extra hours. I would do that I’d wash cars to make some extra money. So couple of weeks, couple of days later, like, hey, you know, someone quit or whatever, if you want to do that job. So I would literally get to the dealership at like 6:45am. Then I would typically finish my day at about 10pm.

At some point, the owner of the dealership noticed that this dude, was there first thing in the morning was like the last guy to leave. And he’s like, what’s up with this guy, and someone put in a good word for me that led to like my first real promotion. Where I became like an assistant manager and then eventually moved into sales, and then sales, management and finance. It was an awesome ride. I mean, the car business created just a tonne of opportunities for me. But towards the end I had, I was about to become a father. And I knew with the demands of running a car dealership, I could either be a great car guy or a great father. It was a no-brainer decision for me as like, Hey, I can’t do this and be a great dad.

So I turned in my notice, and at that point, didn’t know what I was going to do. And then I just did some soul searching and was like. What am I good at? And of course, I only thought it was car sales. Again, another instance in my life where my dad and I had a very meaningful conversation. He’s like, Well, Sonny goes I kind of think if you can sell cars, you can probably sell anything. He’s like, You don’t know anything about cars anyway. You don’t know the difference between a sparkplug and a carburetor? That’s not so cars are not what makes you a good salesperson. So I think you just know how to treat people.

So I started just talking to some friends and discovered real estate and said what, I can tell you in the car business. I’d sell 3035 cars a month as a salesperson make two $300 a car. They just it’s not you got to do such high volume the margins back then were so thin that you had to sell a tonne of volume. And when I looked at real estate, I was like, oh my goodness, you can be part of a $200,000 transaction. And depending on what your role isn’t the deal, pay more money. But one thing I realised about my success in the car business is that we always had an advantage when it came to finance.

That was like our specialty, we knew how to help people that maybe didn’t have the best credit or no money down or had to trade in that they were upside down. Our knowledge and finance helped us help more people. So when I made the decision to get into real estate, I figured I should start in finance. So I started working for a mortgage company and did cold calling, selling refires. That’s how I started in real estate. And I did that for almost a year and the owner of the car dealership had sold the dealership was somewhat retired. I think he was he wasn’t even 40 years old yet. Wow. And he was bored. He’s like retirements not for me, man.

He’s like the car dealership thing that goes, That’s they don’t need me there anymore. I mean, either soldier was in the process of selling it. And he heard a radio commercial about flipping houses from his place in Baltimore County. It’s called investors united. It’s a brick-and-mortar investment school. And he called me and he was like, you know, I know you’re making changes in career and might even already be in real estate. He’s like, I heard this radio commercial, I went to this open house. They teach you how to flip houses, like basically what we did with cars, but with houses. I’d like to talk to you about working together. So we had lunch, like I don’t know, later that week or something, and talked about it.

And I said, Okay, I’m in because this guy taught me everything I knew about the car business like I was scared to death to move into sales. He’s like, What are you scared of? And I said I don’t know. I don’t think I can do sales. He’s like, you’re already selling you know, as an assistant service manager. Do you know you have like the highest average revenue per sales or service ticket? Have anybody in you know, East Coast? Nope, never knew that. So he encouraged me to get into sales. That was like, you know, that changed my life. Once I got into sales, I realized that really like working with people. I had this knack for being able to influence people to make a decision that felt good to them.

So it was kind of a no-brainer for me to get into business with him in real estate. I just trust that as long as I was working with him. That even though I didn’t know anything about a house, or how to flip a house or fix house. Or renovate a house or any of that stuff, as long as I was working with him, it would be okay. And it did we decided to work together. That was in 2006. So that’s my story about how I got into real estate.

Pamela Bardhi
That’s amazing. My goodness, there’s so much to peel back on all of that which I love. Thank you so much for sharing all of that to real back a little bit on you. What did you actually want to be as a kid? Like, what was your childhood dream?

Eric Brewer
I don’t ever remember, I think I just nothing. Like I honestly can’t tell you no, it’s I remember something like my I have a seven year old daughter right now. And she tells me she wants to be an art teacher. So I’m old enough now that maybe at one point, there was something I wanted to be it, I just can’t remember. But I don’t ever remember wanting to be like a fireman, or a police officer or an attorney or I didn’t have aspirations to be like a professional athlete. Like, I think I was just trying to get through each day, my mom was a single mom, my biological father and her split up when I was born. And he went off to the military.

So I didn’t meet him until I was five or six years old for the first time. My mom was just, it was tough. I mean, she was a single mom and working three jobs. And a lot of times I was at like a babysitter or friend’s house. So I think so much for me. What I remember about being young was just trying to get through the day. We changed schools a lot. Because my mom was constantly trying to move us into a nicer neighbourhood or a better house or a bigger place.

So I went to like seven schools between the age of like kindergarten and high school. I know that sounds terrible, but I think I was just more focused on trying to make new friends. And not be picked on and find my way in school and figure out like, what the right outfit was to wear, because it’s different than it was at the last school. And I don’t think I had time to figure out what I want. I was just trying to figure out what I wanted to be that day. Not the luxury of maybe thinking about what I wanted to be when I grow up. I don’t remember ever wanting to be anything. Which is whatever, maybe that’s depressing or funny or whatever. But I don’t remember it being I don’t ever remember aspiring to do anything other than just to get through the day,

Pamela Bardhi
Then they get through the day, right? And there’s nothing wrong with that. Now, I mean, throughout your childhood, or you know, growing up at any point in time. Who are what was your biggest motivation or inspiration?

Eric Brewer
Would you say, as a child or after that?

Pamela Bardhi
It’s up to you, whatever comes to you,

Eric Brewer
I’d have to say it was it was probably certainly when I went in the military, we talk about a culture shock. Like I went from like my sophomore, junior year to no rules, doing whatever I want to not be able to breathe without someone being in my face. I mean, it was have you ever seen that show Scared Straight where they take like knucklehead kids that are getting to trouble. And they have to spend a day in a prison? Yep, that’s what I felt like, I remember sitting in my top bunk, and it was like three in the morning. And I just done like 7 million push ups, and ran 40 laps around the building threw up all my socks and was like.

What in the hell am I doing here? What is this all about? Like, I slept till 11am yesterday, and these dudes got me up doing push ups at three in the morning. But I mean, at that point, it’s too late. There’s no turning back. So that was a pivotal moment. For me, It taught me discipline. It taught me the value of respect that taught me how to respect authority. I learned that I was capable of doing things I never thought I could do. Actually, I was really, really thin. When I went in the Army abs 511, I’m just 155 pounds, and I came out of the military gained like 35 pounds of muscle. And basically, I’d be doing crazy stuff like hiking 50 miles, carrying equipment and running every day of your life three, four times a day and doing all these push ups.

And they put you through these physical tests. It pushed me because in the beginning, I was like, There’s no way I’ll ever run two miles. Then like two weeks later, I was trying to figure out how I could run two miles faster than the other guy. Never could do more than 3540 Push ups at a time somewhere towards the middle or the end of basic training. I was doing nearly 100 Push ups during my test. So it taught me the power of will and how many things we talk ourselves out of here. And without ever physically giving ourself the chance to do it. Because you had to there wasn’t a choice. It’s not like, Well, I think I can or I think I can’t. But they’re gonna push you up that hill.

Whether they have to drag you or the rest of the platoon has to come back and carry you. Like you’re gonna go, there is no option of staying back that is not possible. So I think that’s probably the first time that I started to reimagine what I thought was possible. Because with humble beginnings and and coming up. I think it would always tell myself, I can’t do that, or, you know, I don’t have the money to do that. Or, you know, colleges reserved for people that have money or had great grades. You know,that’s not for me, I just I would always disqualify myself for things. I think from a lack of probably if you boil it down to the most basic was just the lack of confidence. In the military gave me confidence. Right.

Then I think the second most pivotal person or moment in my life was the day I made the decision to get into sales at the car dealership. And the confidence that was installed in me. But by that gentleman, his name’s Craig rich, and he taught me everything about sales. And sales changed my life. I mean, I was now able to buy the car that I never thought I could have the house that I thought I could never have. I was 28, still pretty young when I had my first son. I’ve seen a lot of people go through that at different ages and worried about how they’re going to support a child. That was never a concern of mine, I was already making a significant amount of money.

So, you know, I was able to just focus on the excitement of being a new father and not worrying about the cost of daycare. Or the cost of diapers or any of that stuff. So it allowed me to just be happy about being a parent. Those two things, I think, for me are moments in my life where I remember there being a massive shift in my thinking. And then shortly after that shifted my thinking, my behaviour changed. And then shortly after my behaviour changed, my outcome started to change. Yeah, so I think those two moments in my life were pivotal. So it’d be scary to think what would have happened if those two things didn’t take place?

Pamela Bardhi
Right, thank you so much. Thank you so much for sharing that, Eric. I mean, it’s just always so fascinating to hear, like what has driven us right. Like, well, we’re moving in our lives that made things kind of shift and those definitely sound like incredible moments. Wow. Now you jump into he went from car sales into real estate. So how was it breaking into the real estate market from the car sales?

Eric Brewer
So easy, I think it felt easy, because in the car business, we did new cars, we did use cars. And if you think about like a used car. Like you go to the auction, you buy a messed up car, and you fix it up, and then you sell it. So I think we had an advantage getting into real estate because of the parallel nature of the car business and real estate. It’s like, buy it wholesale, sell it retail, buy it wholesale, sell it wholesale, like they’re very similar businesses. And we were just really good at sales. Like we were really good at sales and marketing, if you think about most real estate companies, depending on their niche. I mean, it’s a real estate company, but at its core, it’s a marketing and sales company. I generate enough opportunities?

And then can I convert enough of those opportunities into revenue generating events to make money? And so I mean, when I first started, we just we bought off the MLS. We had a couple billboards and stuff like that kind of stunk at renovations. But by the end, the House would look better than it did when we started. Then we were really good at marketing for buyers like and with our understanding of finance. Like we were always looking for ways where we could take folks that maybe didn’t have perfect credit.

And create opportunity to become a homeowner where they thought that they were stuck renting or had been turned down by other you know, folks. So I mean, we learned a lot of lessons we took our lumps bought the wrong house mismanaged the renovation budget, overestimated ARV. We made all those mistakes, but we frequently sold our way out of

Pamela Bardhi
it, saying,

Eric Brewer
Like, Hey, I made it out, I learned a lesson. It didn’t kill me, I made a little bit of money. But now I have the little bit of money. And I have the experience. Now I’m dangerous, because I can go out and do that again and not make those mistakes. So the transition was pretty easy. We just, you know, we lined up with a real estate agent who had access to bank owned properties. Had a relationship with a contractor and went and said, What can I sell it for? How much work does it take, and just figured out the gap in between and made a bunch of offers.

Got it accepted and then just grinded through the renovation process? This was back in 2006. So in 2006, like you didn’t have to be a genius to sell a house market was very similar to what it was, say a year ago, post COVID. But yeah, so the transition was, I mean, we made a lot of mistakes. But I think our ability to sell accelerated our learning curve and reduced the damage as a result of the mistakes that we had.

Pamela Bardhi
Right? I love that. Well, I mean, it’s it’s a hell of a lot of lessons when you’re flipping. Like, Oh, my God, the variables involved and that’s what I’ve been doing the last decade. And also on the building side because I also became a licenced general contractor because I didn’t like the way the contractors were running my job. So I decided to get my own licence and run my own thing, because I had all the guys anyway. I was the one kind of juicing the whole project anyway. Well, the contractor was out in 27 different directions. So it was just so funny, like first flip made 100k For me.

And then go on to another one, and I lose 25 You know what I mean? Like, it’s just it’s such a game, and there’s so many variables. But once you get formula down and you get the hook, it’s like, ready to rock and roll. That’s amazing. So you guys did a lot of flips. And then what I love about what you mentioned is like creative financing. Because I really believe and I hear this over and over and over from the most successful entrepreneurs which is the riches are In the niches. The more creative you can get, the bigger the problem that you solve, the more you get paid.

So like, it’s so cool to hear how you embedded the creative finance from the car sales side and kind of brought it into real estate. And we were kind of talking about before this call what you’re up to in the real estate space, which I think is super cool. I mean, beyond flips, I’m sure no vacations and things, other things that I’ve never heard of like cool, fun stuff. So tell me about like the different things that were really success factors for you and kind of where you’ve pivoted to.

Eric Brewer
So like during 2006 2007 2008, before the market crashed, we just worked really hard but bought stuff off the MLS. Because we first person have to look at it first person to make an offer, and then followed up like our life depended on it. You know, grinded through the renovation, and we’d come out with a house that had $15,000 worth of equity left in it, and we Fizbo it everything. So I would save seven $8,000 on realtor commissions. And we would run ads and we’d get leads and send them over to a lender. And specifically aligned ourselves with people that can help people with less than perfect credit and low down payments.

So you take like 50 leads, there might be to qualified borrowers in there with 5% down. But there’s 15 People with a 600 credit score, and $1,000 down if you can figure out how to help more of those people, you’ll sell more homes, and that’s what we did. And then in 2008 when the market crashed, there was two important things we did that today are still paying off. One was we started doing instalment sales agreements. So we realised there was a tonne of Well, I had 1012 properties under contract where the lenders called Mike yet no, we’re out of business sorry, deals not gonna close.

Like, right, like, I mean, we had all these deals in escrow. And the lender and the buyer’s agents, this was like Sorry. Like, the lenders, they’re literally out of business, their offices closed. So we would look at it and go with but they have a 660 credit score and $10,000 down like nope, no loan programme for him. What. You know, the car business, one of the things we did was buy here, pay here. We’re like, I mean, this guy’s got $10,000 down at 660 credit score, and they have the income to pay for this. So we did like one or two out of the deals that fell apart. Like when you know, the market evaporated overnight.

Then my you know, partner who was a genius. He’s like, Listen, if we go to this bank, he’s like, they’ll lend us $100,000 on this property. We’re in it for 80. And we can sell it for 120 and get 20 grand down from folks that became like 50% of our sales from post 2008 to 2010 when the real estate mortgage market started to recover. Like the citizen the market crashed, like you had to have a 9000 credit score and 70% down to get a loan. So we did instalment sales agreements, we accumulate like 140 of them in the next two years, where we were borrowing money at four and 5%. And lending in at 10%. We were doing 15 year amortisation. Our customers were doing 30 year amortisation, and we were still cash flowing 567 100 bucks a house.

So that was a big innovation. You know, when the market crashed, the other was prior to 2008. Like no one was using FHA finance when they made an offer on our property, we never saw FHA contracts. And when we did, my agent would say, we’re not doing that there’s all these inspections and all that crap. We’re gonna go with this conventional deal after 2008. Every single person making an offer on my property, had an FHA loan. It was it was the only real, consistent lending programme that people could qualify for. So as a house flipper, if I bought a house and 30 days later had it renovated.

And I have an FHA borrower, I can’t make that deal. There’s a FHA seasoning requirement that says you have to own the property for 91 days before you can write a contract with an FHA borrower. So I sort of started freaking out. I was like, Whoa, this is this is really impacting my business. Every single borrower wants to buy my house has this FHA loan, and we were knocking out renovations in four or five weeks. So I started scrambling and looking for solutions and generally just stressing about not productively. But for like the first time, in probably last time ever, the US government did something that positively impacted my life.

And they introduced an FHA flip waiver, and they did it to incentivize investors to buy up all this bad inventory. I remember days where I would log in and look at the HUD home store website. And there was five to 10 pages of inventory in my hometown to pick from. That’s how I bought homes, I would just go to all these bank owned properties. I’d say you’re asking 100 I can pay 70. Most of the times they’d say, Okay, please buy it. But the challenge was right is I’d get it renovated for weeks and then had a borrower that couldn’t buy it for six months.

I was stuck holding this inventory until they introduced this FHA flip waiver. And they did it to incentivize guys and gals like us to buy up all that crap. So for that window of time, business was probably the easiest I’ve ever been. I mean, I’m buying up all this bank and stuff. I don’t have to market to get deals. The banks are desperately selling me stuff at pennies on the dollar. I’m renovating it. And then you know, FHA buyers are looking at my stuff. It’s renovated and they’re comparing it to a bank owned property or some poor schmuck that bought their house in 2006. It was 100 grand more on it than what it’s worth now.

Like I had the most sellable inventory in my market. It was renovated and priced right. So that was awesome. But in 2011, the FHA flip waiver expired, and here’s the where the hero’s journey begins. Now I’m flipping like 250 homes a year, I got all this inventory. And now we’re back to this seasoning crap. I remember just like pressing my attorney like, Dude, this is wrong, we got to figure it out, you got to figure it out. I’m gonna I hate your guts until you figure this out. We are no longer friends. He said something to me the effect of like, we know the seasoning requirements starts when you record the deed. Well, if you didn’t record the deed, there wouldn’t be a seasoning requirement.

My dad barely graduated high school. He’s a lawyer. It’s like, Dude, you need to dumb it down for me a little bit like talk to me like I’m in third grade. I don’t know what to do with this information you’re given me. So bottom line is we realise that seasoning starts for FHA, when you record the deed. If you don’t record the deed, you don’t start seasoning. So that got my wheels spinning, right. And the first couple innovations I did were where I had a house that a seller who wanted to sell to me didn’t need a tonne of work. And I knew I could maybe just clean it out and paint it and put a new roof on and sell it for $40,000 more. But if I closed on it, I would start the seasoning period.

So I didn’t, I didn’t close on it. I created these documents that gave me the ability to innovate much like most wholesalers have in their contract. It gives them the ability to assign. And I did five of those deals, and I made money on it. And then I said, Well, now I started looking at every deal through this filter. It’s like once you learn creative finance, or even once you buy a new car. You’re like, I’m gonna get that new Ford Explorer, I love that white S T with the black wheels, and then you get it.

And everybody freaking has one. You don’t notice until you start looking for it. So it was like that way with innovations. And a lot of times where most of my deals in the beginning came from is I would go to public auctions. It was a very popular way to buy homes in Pennsylvania. Because a lot of folks that had an estate or probate or some of that stuff. They would just send it to public auction, I know I’m gonna get a couple bids, it’s reasonable amount of money. I can sell it as is, and I’m only paying most auctions charge 3%. So I would go to auctions.

And when the high bid did not meet the sellers reserve, I would approach them and say, hey, you know, the high bidder was 100. Sounds like you want a little bit more money for that. I feel like I could give you more money if you would work with me on a couple terms of the agreement. And those two terms. Now we have over 240 Some maybe 250 people that I’ve helped teach and implement innovations into their business. The only two things you need to really get flexibility from your seller on is reasonable access and permission to put it on the open market. With those two things, you can turn a lot of nose into innovations. That’s like our little mantra that we talked about, it’s generally with nicer homes.

Because most people that choose not to sell to an investor do so because there’s a reduced amount of motivation and distress. And most often the people that have a reduced amount of most motivation and distress have a nicer house they just go hand in hand I call it the seller seesaw. Like when you look at motivation on one side and condition on the other as condition deteriorates. Motivation goes up. So like generally the people we buy from like home investors has been advertising it for 100 years. We buy ugly houses are very clear on their ideal seller.

They have they either have a messed up roof or a messed up marriage, one of those two things is one of the two right. So but that’s only what I’ve learned is that only 10% of the leads that we generate. Where there’s there’s enough distress or property condition for the deal to make sense for us to be able to buy at 70 cents on the dollar. So we completely disregard the other 90% of the leads that we get because they’re not motivated. They’re not you know, distressed or the house is too I’ve actually heard people say I couldn’t buy it the house was too nice.

Well with Novations there’s two very critical aspects of that deal that make it like my friend Matt. Andrew is our friend Matt Andrews calls it wholesaling. 2.0 When you let’s say buy a nice house and the person will sell it to you at 80 cents on the dollar. Under normal circumstances you cannot sell that to a cash buyer because they want to buy it at 70 cents on the dollar. So when you when you lock up a deal and it’s too high and it’s nice, the investor can buy it. Because there’s no skin left. There’s no meat left on the bone but a retail buyer can buy it.

We can’t sell it normally to a retail buyer. Because an assignment is not a lendable, insurable transaction, FHA, USDA, VA, Fannie Mae. None of them will do, they won’t fund an assignment. It’s not considered an arm’s length transaction. It’s not insurable innovation is because innovation really just means replacement. So when we no VEDA deal, we’re replacing our original purchase agreement with a third party agreement, we’re not assigning it.

So we effectively conditionally release our contract in exchange for the third party contract. And that’s a whole different conversation about how the mechanics of it work. But bottom line is you can buy at 80 cents on the dollar sell to a retail buyer at 100 cents on the dollar. Or for the last two years 110 And not have to take title not have to fund the property not start FHA deed seasoning. You’re effectively wholesaling retail properties. But the mechanism that makes that possible is the Novation because you can’t do that by way of an assignment. It’s not a lendable transaction.

So now you’re able to take I found out of 100 leads 10% of those leads are likely to sell at a wholesale price. Because there’s condition issues and they have high levels of motivation and distress. 50% of those leads are reverse, they have like zero motivation, there’s no chance you’re going to make a deal. Unless over the course of time something about their situation changes. But 40% of our leads are people that have decent homes and a decent amount of motivation. And we consistently disregard and throw away those leads. Because we don’t have the path to get it to a retail buyer.

Novations gives you the path to take those deals and put in front of a whole of a retail buyer. It’s also like a wholesale deal, except they don’t have to close on it and cleaned it up, right. Like the thing with Wholesale is you have to have lines of credit. You have to have access to contractors, even if it’s just you’ll get back into if I closed on it. I’d have to hold it again for three to six months. If I sold it to an FHA buyer, which FHA in our markets 50 to 75% of buyers out there, use FHA. So yeah, that’s what Novations I’ve been doing it since 2011. I’ve done 1200 of these transactions. But I’ve only started sharing it about a year ago.

And when I started telling people about it, they were like, What are you talking about? How do you do that? Teach me that. So I’ve only up until recently only been shared it inside of like. These mastermind groups are these small little networks that a man of these. You know, big real estate investors that I get the chance to work with. And every once in a while and our mutual friend Matt Andrews encouraged me. He’s like, dude, more people need to know about this, you should get out and tell. Teach them how it works. So yeah, and it’s become like the latest craze lately, where you almost can’t go through Tik Tok or Instagram. And run into someone that’s talking about real estate that’s not asking or telling about innovations. But I’ve been doing it for 11 years.

Pamela Bardhi
That’s amazing. So I mean, so when you do innovation, for example, like do you still do what you do work on the property? Correct? Oh, no, you don’t do anything?

Eric Brewer
No, that’s the thing. Remember, because I was telling you like the 40% of people, they have nice houses. That’s why they don’t have enough motivation or distress to sell to someone like us at a deep discount. So what we normally do, like I would say, last time I checked, which is probably a year ago. Our average investment in innovation was around 1500 bucks. And then that stuff is typically just like punch list style appraiser required repairs, like a GFCI. A missing handrail. FHA is big on like peeling paint, you might find like a patch, a peeling paint on a basement window or something.

But we’re not making any of those repairs. Until the home’s appraised at value, we have an offer. We’re at like the mortgage commitment phase, and we’re about to close. I like to highlight it as revenue without renovation. And you and I know enough about construction than anytime you can make money and not have to swing a hammer. Sign me up.

Pamela Bardhi
Yeah, that’s what I literally you just read my mind. I’m like, Eric,

Eric Brewer
Is that’s the bigger thing. There was people talking about and doing Novations before I started teaching it, but it was it was a fix and flip strategy. They were quote unquote, partnering with the seller. I don’t know everything about it, because I never did that. But they were using the Novation tool, but using it to fix and flip homes. Which is not again, maybe it works, maybe it doesn’t I don’t know enough about it. But for me, when I look at 40% of all of my leads are people that have decent homes that are reasonably motivated. There’s a big, big, big, big part of the I mean, think about most people that own homes, they’re not fully renovated. And they’re not clapped out, you know, crap boxes.

Most of the homes out there are in decent shape, but we’re always out there hunting for the needle in the haystack. Which is a super motivated seller with a messed up house. And then we disregard the largest portion of Have the cellar population who has a decent house is reasonable. And it’s up to us to just figure out how to turn that into a profitable transaction. That’s win win for both us and the seller. That’s what Novations is, does we do over 100 of them a year. Our average profit with our students is over $26,000 per deal.

So it’s more profitable than a normal wholesale deal. We’re not doing construction, and you don’t have to go get new leads. It’s not like, Hey, we’re gonna get into land development? Well, I’d have to go get a whole new list for that. And I gotta speak a slightly different language. When I talk to a seller of 100 acre parcel of land. These are the exact same people you’re already talking to, you’re just telling them no, sorry, I can’t help you. Literally, like I watch people when we train them and help them implement innovations. We listen to their lead manager calls or you know, the first person of contact. And as someone’s telling them, they have a decent home, they’re gonna help no way can’t help them. Like we disqualified nice houses. This gives you the ability to actually wholesale nice houses.

What Would Eric Older Self Tell His Younger Self

Pamela Bardhi
Oh, my gosh, whoa, I mean, I feel like you’ve unlocked something magical here. So now I’ve got to ask you this question. And it’s my favourite questions, which is what would your older self tell your younger self based on what you know now? And it could be the Novations or it could be anything that you will hear

Eric Brewer
I think, you know, I’ve made a lot of money innovations continue to do it. I mean, it’s 40% of our business, we just locked up, we bought it for 150 Sold it for 305. So you do the math 155 Novation and here’s the key. We have part of our dispo process now is we list everything in the MLS. Because we in our negotiations, we include that in our negotiations. It’s like, hey, you know, Pam, if I’m gonna come up from 75 to 100. I need you to give me permission to put it on the open market. And 95% of people I know this will be a shock to a lot of people listening.

Because we think that every seller is selling to us because they want to close in five days, and they don’t want showings. I’m here to tell you that’s not the case. But we had a full price offer from a cash investor for $200,000. It was like a $50,000 deal, right? That’s awesome. But because Novations is standardised and part of our offer process. Anytime we move off our original offer, we start to ask for concessions from sellers. And we know the most profitable concession I can get is someone that’s willing to give me reasonable access. To show the home and give me permission to put it on the open market.

So the same day we got a full price cash offer from one of our investors, we had a cash buyer from the MLS offers 305. So I would have gladly taken that $50,000 profit, like that’s double our normal profit. But now instead we’ll make 150 Now I have to pay realtor commissions. When it all shakes out, maybe I make 140. I went from a 55 $60,000 profit to 140,000. Like how many of those do you have to do a year for it to make a difference? Not many? So yeah, most of the people that we teach it to are able to do an extra two roughly deals a month at 25k. That’s 52 grand times 12. I think that adds up to over half a million bucks.

Pamela Bardhi
Sounds good to me, man, you’re my new best friend, I know that. So this is what you were telling your, um, your old your younger self about

Eric Brewer
So I think that, for me is such a small portion of it. But I think what I would tell myself is to invest more in relationships. Like it’s, that’s, you know, innovations are cool, we make a lot of money. But I get way more internal gratification out of people than I do. Like, if you think about it, when you really start digging. And you think about like why you want to make money. If you give me five minutes with anybody that says that they work for money, by the end of the conversation, I’ll be able to tell you the truth.

There’s something that money provides them it might be security, it might be safety, it might be access. Well access to what access to the country club, what’s at the country club, people. At the source of nearly every one of us as human beings is our desire to want to be part of another group of people. Whether it’s to be accepted, whether it’s to be the head of that group of people, like in some capacity. We have human natures, we want to be part of a team, we want to be part of a group. We want to be accepted, we want to be loved, we want to be acknowledged, we want to be encouraged. And I didn’t figure that out until very, very late in my career.

So my older self, even if I had to trade innovations, which luckily I don’t have to if I had to trade innovations. For a better understanding of the importance of meaningful relationships. I would do it because Novations is probably made me a million bucks a year for the last 11 years conservatively. Wow, I would still trade that in for opportunities to meet with people like you opportunities to connect with people like Matt and Andrews. The most valuable assets I have in my life is are not money. It’s the relationship with my children and relationship I have with my mentors.

The relationship I have with the people that I mentor, I do some coaching and stuff like that. And those are the things that you know, I think about when my days They’re done here. And I’m writing off into the sunset, I think that’s what I’ll remember the most is the impact that I was able to have on people. Somewhere along the line, someone told me to make sure that we cherish our smiles and our cries.

Pamela Bardhi
Yes, yes. Amen. I love that. Now, what’s up in your world in the next six to 12 months.

Eric Brewer
So we have a platform we sell that we have, you know, over 250 people that have already joined that group. And another 25 to 30 each and every month that invest with us to have his teach and implement it. And we give them all the documents and and that’s all cool. But for me, I’m very fortunate to have a team that runs my real estate investment company. Will do close to 400 deals again this year. I’m sort of been fired from that organisation, and don’t necessarily have a seat at that table anymore. I was spent this whole last week in Phoenix, Arizona with a bunch of my real estate pals that collective genius, and the business keeps chugging along.

I know about that deal that I just told you about. But I had nothing to do with it. So I gotta find something next for me. So I’ve hired another CFO in my business and promoted my current COO. And we’re going to learn multifamily, because we want to direct our assets and leverage and our lending and our resources towards just bigger deals. And then I’m going to build a coaching and education company. I don’t know what it looks like, if it’s a blend of sales, if it’s mentoring, if it’s leadership, I don’t know what it’ll look like. But I’ve realised that I love teaching, I love coaching. You want to figure out where the demand is and where people need help. Then build some type of business where I’m able to give back the things that I’ve learned to people that can use it.

Pamela Bardhi
I love that, Eric. Oh, my goodness, that sounds super exciting. And I just love that now you’re on to bigger and better things. And you’re basically focused on impact, which is amazing. I did the same thing in 2022, I said, you know, this is awesome. I love flipping I love being boots on the ground, I love carrying two by fours and Home Depot with heels on and everyone’s like Yeah. But now it’s time to help everyone else rise. And so I love where you’re at and kind of where you’re going and I just can’t wait to see you along in that journey. Now. You’ve got to let everyone know where to find you my friend. Where can we find you and you’re awesome.

Eric Brewer
The best place to find me is on Instagram. You can look me up on Instagram. It’s Brewer underscore invest. If you have any interest innovations, you can either find me there I put out some content every once in a while. Or you can go to Brewer method.com. We have a full library of documents. I’ve recorded 20 plus videos in there. You can poke around, you know, take a peek schedule an appointment with one of our sales reps or myself to learn more about innovations. To see if it’s a good fit for your business. Those are the two best places to connect with me as Instagram or Brewer method.com

Pamela Bardhi
Eric, you are awesome. Thank you so much for being here today. It was a true honour and a privilege. Thank you so much.

Eric Brewer
Appreciate it.

Pamela Bardhi
So that’s it for today’s episode of underdog catch us next week, always dropping on Thursdays. And remember, if you’re interested in real estate or want to learn how to create more money and magic in your life. Check out meet with pamela.com and let’s chat sending you so so much love